Supreme Court Clarifies No-Fault Liability under Section 163A of the Motor Vehicles Act: Chandrakantha Tiwari vs. New India Assurance Company Ltd. (2020)

Date of the Judgment: 08 June 2020

Citation: 2020 INSC 427

Judges: R. F. Nariman, J., Navin Sinha, J., B.R. Gavai, J.

Can a claimant be denied compensation under Section 163A of the Motor Vehicles Act, 1988, if they cannot prove the driver’s negligence or if the deceased was not the driver? The Supreme Court addressed this question in a recent case, clarifying the scope of “no-fault” liability in motor accident claims. The court emphasized that under Section 163A, claimants are not required to prove negligence on the part of the vehicle owner or driver. This judgment clarifies the “no fault” principle under Section 163A of the Motor Vehicles Act, 1988. The judgment was delivered by a three-judge bench comprising Justices R.F. Nariman, Navin Sinha, and B.R. Gavai, with the opinion authored by Justice R.F. Nariman.

Case Background

On March 18, 2004, a road accident occurred resulting in the death of the claimant’s son, who was allegedly a pillion rider. The Motor Accident Claims Tribunal (MACT) in Dehradun determined that the accident was caused by the rash and negligent driving of the vehicle’s owner (Respondent No. 2). The MACT awarded compensation to the claimant, considering the victim’s age (28 years), a monthly income of Rs. 3,000, and applying a multiplier of 8. The insurance company was held liable to pay Rs. 1.99 lakhs plus 6% interest.

The High Court of Uttarakhand overturned the MACT’s decision, stating that since the insurance company denied the deceased was a pillion rider and claimed he was driving himself, and because the claimant was not an eyewitness, the claim under Section 163A of the Motor Vehicles Act, 1988, should be dismissed. The High Court also noted that there was no proof of the deceased having a valid driving license.

Timeline

Course of Proceedings

The Motor Accident Claims Tribunal (MACT), Dehradun, initially ruled in favor of the claimant, awarding compensation of Rs. 1.99 lakhs plus 6% interest. The High Court of Uttarakhand reversed this decision, citing lack of eyewitness testimony and the absence of proof of a valid driving license for the deceased. The claimant then appealed to the Supreme Court of India.

Legal Framework

The case revolves around Section 163A of the Motor Vehicles Act, 1988, which provides for “no-fault” liability in cases of death or permanent disablement resulting from motor vehicle accidents. Section 163A(1) states:

“Notwithstanding anything contained in this Act or in any other law for the time being in force or instrument having the force of law, the owner of the motor vehicle or the authorised insurer shall be liable to pay in the case of death or permanent disablement due to accident arising out of the use of motor vehicle, compensation, as indicated in the Second Schedule, to the legal heirs or the victim, as the case may be.”

Section 163A(2) further clarifies:

“In any claim for compensation under sub-section (1), the claimant shall not be required to plead or establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act or neglect or default of the owner of the vehicle or vehicles concerned or of any other person.”

This section establishes that claimants are not required to prove negligence or fault on the part of the vehicle owner or driver to receive compensation. The compensation amount is determined based on the structured formula provided in the Second Schedule of the Act.

Arguments

Arguments by the Appellant (Claimant):

• The claimant argued that the petition was filed under Section 163A of the Motor Vehicles Act, 1988, which is a “no-fault” liability provision. Therefore, it was not necessary to prove negligence or rash driving by the vehicle driver.
• The claimant contended that the multiplier of 8 used by the MACT was incorrect because it was based on the claimant’s age, not the victim’s age. The victim was 28 years old, and the multiplier should have been 17.
• The claimant submitted that the High Court erred in placing the burden of proof on the claimant when the MACT had already established the facts based on the claimant’s cross-examination.
• The claimant also pointed out that the insurance company had given up the issue of the validity of the driving license before the MACT, but the High Court still considered it.

Arguments by the Respondent (Insurance Company):

• The insurance company argued that the High Court’s judgment was correct.
• The insurance company argued that “no-fault” liability under Section 163A of the Motor Vehicles Act, 1988, is limited to Rs. 1 lakh. Therefore, even if the MACT’s judgment was upheld, the maximum compensation should be Rs. 1 lakh.

Issues Framed by the Supreme Court

The Supreme Court addressed the following key issues:

1. Whether the High Court was correct in dismissing the claim under Section 163A of the Motor Vehicles Act, 1988, based on the claimant’s inability to prove negligence or the deceased’s driving status.
2. Whether the High Court was correct in considering the issue of the validity of the driving license when it was not pressed by the insurance company before the MACT.
3. Whether the multiplier applied by the MACT was correct.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following legal authorities and provisions:

• Section 163A of the Motor Vehicles Act, 1988: This section provides for “no-fault” liability in motor accident cases. The Court emphasized that under this provision, claimants are not required to prove negligence or fault on the part of the vehicle owner or driver.

Judgment

The Supreme Court allowed the appeal, setting aside the High Court’s judgment and modifying the MACT’s award. The Court held that:

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the clear language of Section 163A of the Motor Vehicles Act, 1988, which establishes a “no-fault” liability regime. The Court emphasized that the purpose of this provision is to provide quick relief to victims of road accidents without requiring them to prove negligence. The fact that the insurance company had conceded the issue of the driving license before the MACT also weighed heavily in the Court’s decision. The Court also noted the error in calculating the multiplier based on the claimant’s age rather than the victim’s age.

The court reasoned that the High Court erred in requiring the claimant to prove negligence, which is contrary to the purpose of Section 163A. The court also emphasized that the insurance company could not raise the issue of the driving license at the High Court level since it had been abandoned before the MACT. The court corrected the multiplier, applying the correct value based on the victim’s age.

The Supreme Court stated:

“A perusal of this provision would show that Shri Sahoo is correct in stating that the claimant need not plead or establish that the death in respect of which the claim was made, was due to any negligence or default of the owner of the vehicle or of any other person.”

“Further, it is also clear, as has been pointed out hereinabove, that so far as the driving licence aspect of the case is concerned, it was squarely given up by the insurance company before the MACT, but then utilised by the High Court to disentitle the claimant to relief. On this ground also, the High Court is incorrect.”

“The amount that will be paid will now be the amount mentioned in the MACT’s judgment with the correction that the multiplier instead of being 8 is now 17.”

Key Takeaways

• No-Fault Liability: Claimants under Section 163A of the Motor Vehicles Act, 1988, are not required to prove negligence or fault on the part of the vehicle owner or driver.
• Burden of Proof: The burden of proving negligence does not lie with the claimant in claims under Section 163A of the Motor Vehicles Act, 1988.
• Multiplier Calculation: The multiplier used to calculate compensation should be based on the age of the deceased, not the claimant.
• Driving License: If the issue of driving license validity is not pressed before the MACT, it cannot be raised at a later stage.
• Quick Relief: Section 163A aims to provide quick relief to victims of road accidents, and the courts should interpret it in a way that promotes this objective.

Directions

The Supreme Court directed the insurance company to pay the amount due to the claimant, calculated as per the MACT’s judgment but with the corrected multiplier of 17, within three months from the date of the judgment.

Development of Law

The ratio decidendi of this case is that under Section 163A of the Motor Vehicles Act, 1988, claimants are not required to prove negligence or fault on the part of the vehicle owner or driver. The court clarified that the purpose of the provision is to provide quick relief to victims of road accidents, and the courts should interpret it in a way that promotes this objective. The court also clarified that the multiplier for compensation calculation should be based on the age of the deceased and not the claimant.

This judgment reinforces the “no-fault” principle under Section 163A of the Motor Vehicles Act, 1988, and clarifies the calculation of compensation, ensuring that victims of road accidents receive timely and adequate relief without having to prove negligence.

Conclusion

In conclusion, the Supreme Court’s judgment in Chandrakantha Tiwari vs. New India Assurance Company Ltd. clarifies that under Section 163A of the Motor Vehicles Act, 1988, claimants are not required to prove negligence or fault on the part of the vehicle owner or driver. The Court corrected the multiplier used by the MACT and directed the insurance company to pay the revised amount within three months. This judgment reinforces the “no-fault” principle and ensures that victims of road accidents receive timely and adequate relief.